FRANKFURT, Germany (AP) — Deutsche Bank, Germany’s largest, said Tuesday its second-quarter net profit fell by half in the second quarter because of lawsuit expenses and higher taxes.

Net profit fell to 335 million euros ($445 million) from 666 million euros a year ago after the bank set aside an additional 630 million euros to cover lawsuit losses — money that has to be deducted from earnings.

Deutsche Bank faces a number of legal challenges, including lawsuits related to U.S. mortgage bonds and a scandal over rigging of a key interest rate benchmark by several banks. Its legal set-asides have now reached 3 billion euros.

Chief financial officer Stefan Krause said legal troubles could be an ongoing drag on earnings. He told analysts in a conference call that the bank “assumed a continuing headwind from litigation” in its budgeting and planning “for the next couple of years.”

Deutsche Bank shares sank 3.9 percent after the market open in Frankfurt and traded at 34.49 euros.

The bank also saw its effective tax rate jump to 58 percent from 31 percent a year ago. It paid 457 million in taxes compared to 301 million in the year earlier period. The reason was that the bank had expenses — such as the litigation costs — that are not tax deductible.

Overall revenue rose 2 percent to 8.2 billion euros.

On the positive side, the bank said it was making progress in strengthening its finances to meet new regulatory demands and hold down costs. It also saw revenue from trading stocks jump by 55 percent, to 787 million euros.

However, trading in bonds and other products brought in 11 percent less revenue of 1.9 billion euros during the quarter as a result of the turmoil on fixed-income markets due to indications from the U.S. Federal Reserve that it could begin scaling back its bond purchases.

Co-CEOs Anshu Jain and Juergen Fitschen said in a statement that the “core business performed well” and that the “franchise remained strong” during the period.

Jain and Fitschen, who took over last year, have struggled to move the bank past lawsuits and legal issues that date back for years in some cases. They have stressed the need for the bank to change its culture and, as Jain put it, “restore the bond of trust with society.”